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The Journal Editorial Report

Paul Gigot discusses news, politics, society and finance.

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Irs 7, Us 6, Asia 3, Ukraine 3, The Pentagon 2, Pentagon 2, America 2, Obama 2, Dan Henninger 2, Paul Gigot 2, Dave 2, Russia 2, Nasa 2, Kim 2, Arthel Neville 1, Bret Stevens 1, Gregg Jarrett 1, Biden 1, Dan 1, Donald Rumsfeld 1,
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  FOX News    The Journal Editorial Report    Paul Gigot discusses news,  
   politics, society and finance.  

    March 1, 2014
    11:00 - 11:31am PST  

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this week on "the journal editorial report" new questions how seriously the justice department is taking the irs targeting probe. as a new rule, restricting political speech has the agency coming under fire from liberals and conservatives. a serious proposal to overhaul the tax code the first time in more than 25 years. is there any hope for congressional action this year? and the pentagon proposes to slash the army to its smallest size in almost 75 years. how risky are the cuts for american security?
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welcome to the journal editorial report. i'm paul gigot. new questions about the investigation into the irs targeting of conservative groups. with the house subcommittee holding hearings and just how seriously the department of justice is taking its probe. this as liberal groups like the aclu and sierra club join conservative counterparts in voicing opposition to a new irs rule aimed at further restricting political speech. for more on both developments, i'm joined by "wall street journal" columnist and deputy editor dan henninger, kim strossel. what did we learn about the state of the justice probe such as it is? >> well, they had a number of legal experts appear before the house oversight committee. it was a pretty depressing
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recounting. this seems to be a farce. you have got this probe being headed up by a former obama donor, barbara basserman, heading out of the civil rights division of the justice department known as a hotbed of liberalism. >> hold it. this is not being run out of the criminal division? >> right. public integrity unit which is where it should be. this is being run out of the civil rights division. >> what is the justice department's response when that is pointed out? >> they don't have a response. that was part of this discussion this week in front of the committee. they won't brief congress on anything. one of the scholars who was present there pointed out it's ludicrous the fbi and justice saying we can't share information, it might derail our probe. this witness used to work at the justice department and said that is ludicrous.
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there is no reason why they can't be continually updating congress. they don't want to share or may not be doing what they are supposed to be doing. >> there is new oefts that the irs is still going after conservative groups when it is vetting tax-exempt status. tell us about that, kim. >> one of the biggest fictions this year is the idea somehow this entire irs targeting thing has been solved and fixed. there was a story i had out about this one group the tea party patriots. they are still being targeted. they had been approached by the irs about taking a special deal. the irs said we'll give you your determination as a 501-c4 if you give up your speech rights. they turned it down and there was another round of harassing questions. the woman who runs tea party patriots suddenly appeared on the witness list to testify in front of congress and the day
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before she was meant to give that testimony, the irs called and said, guess what, you got your determination letter. finally. >> where is the rest of the press corps on this? it's like the story doesn't exist other than with people like kim and a few others. digging into it and coming up with troubling details. this is not any old variety garden part of government. this is the irs with the tax power over every american. >> the standard line why we are not covering it is that there is no smoking gun connecting the white house. i agree there is no smoking gun. there is a smoking fuselage right here. this is about citizens united, the supreme court decision in early 2010 that said corporations and private groups participate in politics. right after that in a state of the union speech, anybody who watches it will never forget the president with the supreme court
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justices sitting in front of him denouncing citizens united. that set off a chain of events which various democratic senators would send letters to the irs. >> and hold hearings. bringing the irs officials before the senate saying what are you doing about these tax-exempt groups? >> notably senator dick durbin of illinois. senator chuck schumer of new york asked the irs to get on the job of investigating these party groups to see if they were violating irs laws. that's exactly what they did. that what is these hearings have been about. what more do you need to connect the dots of the fact something was set in motion to push these people out of politics? >> this is also a developing story in the sense that the irs has proposed a new regulation about what these so-called nonprofit groups can or cannot do politically. it's got an uproar in response from the right and left.
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>> it's an astonishing uproar. the rule within a comment period. and it closed thursday with over 100,000 individual comments. it was already breaking records when it was at 20,000. this was an astonishing response coming from the left and the right. you had groups like the aclu saying it would significantly chill political speech. you also had the liberal group alliance for justice saying this would significantly harm the infrastructure of our democracy. we can't forget about the tea party groups, too. jenny beth martin testified in the oversight committee this week. she said basically this rule would force her group not to mention the name of a candidate within a certain period 30 to 60 days before an election. >> is there anybody for this other than politicians who don't like people running against them?
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>> i guess the irs is for it? >> let's understand what is going on here. between now and november, those liberal groups will remain in action. this is being done to intimidate all these conservative groups staying on the sidelines in midterm elections. it will have its intended effect whether it becomes official or not. >> thank you all very much. when we come back, for the first time in 25 years, a meaningful tax reform proposal is on the table in congress. even some republicans are saying, well, maybe not now. are they right?
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we've already lost a decade and before we lose a generation, we must enact real, meaningful tax reform to get this economy back on track. >> republican house ways and means chairman dave camp
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unveiling an ambitious plan to overhaul the nation's tax code since 1986. at the heart of camp's proposal is to collapse the seven income tax brackets to three with 99% paying 10% or 25%. his plan would also eliminate some popular deductions. a political risk in a midterm election year. we are back with dan henninger and kim strassel and mary anastasia o'grady. what do you like about this plan? >> i'll start with simplification, lower marginal rates and fewer carve outs for people who can afford to put lobbyists in washington 24/7. right now the u.s. tax code is 70,000 pages long. in 1986, it was 26,000 pages long. if that doesn't signal something is wrong, i don't think we have
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any evidence. on top of that, the irs erroneously sent $132 billion of taxpayer money to false, fraudulent claimants over the last ten years. and on top of that, a tax code should encourage innovation and investment. this one does not. >> that last point is where i pick up. i think that the focus here on this reform is simplification, but also growth. we need a tax code that doesn't retard the economy but enhances it. puts fewer obstacles in front of individuals and businesses to invest. i think this goes a big step in that direction. not perfect, but makes a big step in that direction. >> yeah, well, that's for sure. i've taken a look at some of the provisions. let me say it's not going to put tax accountants out of business. >> that is a dream.
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>> it's simpler but not simple. it reduces the corporate rate to 25%. we now have the highest in the industrialized world. >> which is 35%, closer to 40% if you include state rates. >> if you talk to people in business, they say wow, that would unlock a lot of money if you would get that rate down to 25%. interesting thing is barack obama could have had that 25% rate in his first term. there is general rised bipartisan support for doing it and he won't do it, which is one of the big problems sitting in the middle of tax reform. we don't have a president willing to participate in the process. >> kim, dave camp came in to see us this week. he didn't say this, but i'm going to infer a lot of the weaknesses in this plan which the top rate of 35% of individuals is still too high for reform. those weaknesses are an attempt to reach out in a bipart of democrats who run the senate and white house saying maybe we can work together and get something
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done this year. is that prospect possible? >> the history is important, too. mr. camp has been working on this for three years. 30 hears. he was also working closely with max baucus who was the chairman of the senate finance committee who would also express a commitment to tax reform so yes. >> and they shipped him to beijing as the new ambassador. >> you put your finger on it. there have been a few outliers in the democratic party. possibly mr. baucus' successor ron white, but for the most part this party remains opposed, as does the president, to any sort of tax reform. they don't want it. they like the current code. they're willing to accept all the messiness that comes with it if they can generally keep that in place. >> what about the risks politically?
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the reduction in the mortgage introduction you can take. right now it's capped at $1 million. this would reduce that to $500,000 on future mortgages, which is a big house by most american standards. >> not surprisingly, the lobbyists for real estate and builder are lodging to denounce the bill. the government has finally agreed to look at this new package using what they call dynamic scoring, which is they will measure not just how many cuts there are, but if the economy grows, as we expect, what the revenue will look like. what dave camp outlined for us was a very positive story in terms of more richb ewe for the government because we will have faster growth. >> $700 billion estimate over ten years which is a huge revenue windfall. i would say, dan, the
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republicans should vote on this even though leadership is saying privately they don't want to. the republicans have to be for something for a change. we know they are against deficits and this or that program. they are against obamacare. what are they for? >> as you pointed out at the beginning, congressman camp held hearings all over the country. he's listened to a lot of people. much of what he's done here is the product of what came out of those hearings. i believe there is broad political support in the country for going in this direction. so the republicans should take advantage of that. >> thank you all. when we come back, the pentagon proposing to slash the army to pre-world war ii levels. what it means for our influence abroad next. [ female announcer ] as you get older, protein is an important rt of staying active and strong. ensureigh protein... fifty percent of your daily value of protein. low fat and five grams of sugars. [ major nutrition ] ensure. nutrin charge!
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the defense department proposed slashing its army for the first time in 75 years setting up what promises to be a fierce fight on capitol hill. law makers on both sides of the aisle vowing to fight the proposed cuts to the pentagon budget. bret stevens joins us with more. they are taking the army down from what to what? >> 520,000 now, under 450,000 at some point in this term, which would leave us with an army as small as it's been since 1940 before the eve of the second world war. >> on the other hand, he's increasing special forces from 66,000 to 70,000 and taking down the marines slightly from 190 to 182,000. status quo mostly there. what do you make of this? is it as risky as some of the critics say? >> i think it is.
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for instance, with an army of 450,000 men, if we had that in 2007, we never could have contemplated a surge. >> surge in iraq. >> the surge in iraq which allowed us to win the war, at least in iraq. the army -- let's not forget the army was too small back at the end of the first bush administration. that's why we had to fight the iraq/iran wars sequentially. we never could conduct a proper counterinsurgency. the administration says this is an army sized for the kind of strategy we have. in geo politics you don't get to only fight the wars you like to fight. >> they are saying, we are investing in cyber. big threat. everybody agrees on that. we are pivoting to asia, to invest in the navy. the marine can get to places
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fast. you don't have to have the same infrastructure to be in logistics to bring them over in the tens and hundreds of thousands. what's wrong with that strategy? >> let me take you back 14 years. bright new defense secretary donald rumsfeld says we are going to have a revolutionary in military affairs because we are not going to fight these low grade counterinsurgency fights. we need a much lighter high-tech force. that is what the pentagon was going for. a bunch of guys with box cutters got on civilian aircraft and started the wars of the last few years. it's easy to say these are the wars of the future, but we don't know what the wars of the future are. the responsibility of a super power to be prepared for a variety of contingencies. >> is the american government prepared to finance what bret is talking about? the entitlements are squeezing out defense, which is what
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happened in europe and why the german army is 62,000. something like that. they don't have defense spending except for the french around british. >> the american public will support these kinds of commitments only if an american president uses the leadership to explain why it's necessary. let's understand the context in which this is happening right now. you mentioned the pivot to asia. nominally there is a pivot to asia. secretary of state kerry and vice president biden both made special trips to asia to reassure the asians that it was real because they doubted that the commitment was real. the s decided to go it alone in the middle east because they doubted our commitment to syria. in all these areas of the world the sense is the united states is pulling back. if we cut the defense forces like this, they are going to start making deals with whoever they need to in those parts of the world. that will be to our detriment, for sure. >> in the past, in the '90s when
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bill clinton cut the defense budget to 3% of gdp of the overall economy from about 5.5% during the reagan era, the republicans put a floor under it. we had to build up post 9/11. where are are the republicans standing up and making any critique of this? >> there is little opposition. the opposition you hear, the opposition to base closings is the wrong opposition. we need to cut some of the overhead to focus on real war-fighting capabilities. there is an isolationist mood that's taken over the republican party. they hate that word, but that is what it is. we have to pare back our foreign commitments for the sake of small government. obama wants to pare them back for the sake of big government. our security and prosperity at home depend on a secure and prosperous world. >> we hope there will be a real debate about this going forward, including some republican candidates for president. we have to take one more break.
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when we come back, hits and misses of the week. [ male announcer ] research suggests cell health plays a key role throughout our lives. one a day men's 50+ is a complete multivitamin designed for men's health concerns as we age. with 7 antioxidants to support cell health. one a day men's 50+.
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time now for hits and misses of the week. bret? >> nasa this week announced that it had discovered 715 new planets throughout the universe. this is, let's remember 20 years ago we didn't know there was a single planet outside our solar system. this is the basic research nasa does so well that is so important, legitimate function for government. i congratulate the sciences at the space agency for doing this essential, fundamental work. >> colin? >> this is a hit to a 501-c4 group called empower texans, standing up to the lone star's state attempting to disclose its
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donors. it isn't required under state or federal law. two legislatures got it to investigate the group and subpoena their donor information. the group filed the federal lawsuit saying it violates their right to free speech good. for them. >> a miss to america's universities. a gallup poll found only 11% are are giving students adequate skills they need for the work place. another poll found 96% of chief academic officers think by and large they are doing a pretty good job. this is a big disconnect. >> especially when you need jobs. >> exactly. it sounds like a big make-up call for the universities. the old college try and modern work place isn't good enough. remember, if you have your own hit or miss send it to us at jer @foxnews.com.
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that's it for this week's show. thanks to my panel and all of you. i'm paul gigot. hope to see you here next week. a fox news alert. russia stirring up even more tensions in ukraine. a short time ago the russian parliament approving a measure to deploy troops to ukraine's strategic crimea peninsula sparking fears of an all-out war between these two countries. i'm gregg jarrett and welcome to america's news headquarters. >> i'm arthel neville. ukraine's acting president saying their country's forces are on high alert but are seeking a political solution by russia. the latest move by moscow is being met with anger